The Stuart Management Association held its annual public relations luncheon in April Year 2. Based on the previous year's results, the organization allocated $29,010 of its operating budget to cover the cost of the luncheon. To ensure that costs would be appropriately controlled, Molly Hubbard, the treasurer, prepared the following budget for the Year 2 luncheon. The budget for the luncheon was based on the following expectations: 1. The meal cost per person was expected to be $13.30. The cost driver for meals was attendance, which was expected to be 1,550 individuals. 2. Postage was based on $0.74 per invitation and 3.750 invitations were expected to be mailed. The cost driver for postage was number of invitations mailed. 3. The facility charge is $2,500 for a room that will accommodate up to 1,700 people; the charge for one to hold more than 1,700 people is $3.000. 4. A fixed amount was designated for printing, decorations, the speaker's gift, and publicity. $29,010 STUART MANAGEMENT ASSOCIATION Public Relations Luncheon Budget April Year 2 Operating funds allocated Expenses Variable costs Meals (1,550 x 513.30) Postage (3.750 X 0.74) Fixed costs Facility Printing Decorations Speaker's gift Publicity Total expenses 20,615 2,725 1.100 990 750 29, ele 29.010 Total expenses Budget surplus (deficit) Actual results for the luncheon follow STUART MANAGEMENT ASSOCIATION Actual Results for Public Relations Luncheon April Year 2 Operating funds allocated $29.01 Expenses Variable costs Meals (1.770 x $14.00) 24,7 Postage (4,750 x 0.74) 3.515 Fixed costs Facility 3.00 Printing 1.100 Decorations 990 Speaker's gift Publicity 750 Total expenses 34.415 Budget deficit $(5.05) 250 Reasons for the differences between the budgeted and actual data follow 1. The president of the organization, Rodney Snow, increased the invitation list to include 1.000 former members. As a result, 4.750 invitations were mailed 2. Attendance was 1770 individuals. Because of higher than expected attendance, the luncheon was moved to a larger room, thereby increasing the facility charge to 53000 Publicity Total expenses Budget deficit 34, 415 $(5,405) Reasons for the differences between the budgeted and actual data follow 1. The president of the organization, Rodney Snow, increased the invitation list to include 1.000 former members. As a result, 4,750 invitations were mailed. 2. Attendance was 1770 individuals. Because of higher-than-expected attendance, the luncheon was moved to a larger room, thereby increasing the facility charge to $3,000 3. At the last minute, Ms. Hubbard decided to add a dessert to the menu, which increased the meal cost to $14.0 per person 4. Printing, decorations, the speaker's gift, and publicity costs were as budgeted Required: a. Prepare a flexible budget and compute the sales and variable cost volume variances based on a comparison between the master budget and the flexible budget. b. Compute flexible budget variances by comparing the flexible budget with the actual results. Complete this question by entering your answers in the tabs below. Required A Required B Compute flexible budget variances by comparing the flexible budget with the actual results. (Indicate the effect of each variance by selecting "F for favorable, "U" for unfavorable, and "None for no effect ( zero variancel.) Required A Required B Compute flexible budget variances by comparing the flexible budget with the actual results. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.ezero variance).) Flexible Budget - Flexible Variances Actual Results 29.010 24.780 3,515 Allocated funds Expenses Variable costs: Meals Postage Fixed costs: Facility Printing Decorations Speaker's gift Publicity Total expenses Surplus(deficit) 3,000 1,100 990 280 750 34,415 (5.405)
